And lagi worse, the PAPee traitors could actually resort to replacing the citizens with FTrash!
In recent weeks, many experts have expressed growing concern about a bubble forming in China's stock and property markets. While investors love it when prices rise, many observers fail to realize the hidden and harmful impact it has on worker productivity, competitiveness, and demographic trends.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o:p></o:p>
As part of Beijing's effort to stimulate the economy, Chinese banks made $1.08 trillion in loans in the first six months of 2009, triple the year-earlier level. While most of that was intended for new roads, bridges, and factories, an estimated 20 percent was put into stocks by business managers seeking quick profits.<o:p></o:p>
Andy Xie, an independent economist based in Shanghai, recently warned in a blog post that Chinese stocks and properties are 50-100% overvalued. "The odds are that both will adjust in the fourth quarter (of 2009)," predicts Xie. “However, both might flare up again sometime next year. Fluctuating within a long bubble could be the dominant trend for the foreseeable future."<o:p></o:p>
Frank Gong, chief economist for China at JPMorgan Chase was quoted in Businessweek as saying, "Equity markets are supposed to do that." Gong and others argue it's unlikely the government will choke off credit, because no one wants to be blamed for slowing China's recovery.<o:p></o:p>
Xie calls China's asset markets a giant Ponzi scheme and predicts they will collapse when the US dollar becomes stronger. He warns, "The most ignorant retail investors are being sucked in by the rising momentum. They again dream of getting rich overnight. As in the past, retail investors usually lose, especially like the ones jumping in now. The final frenzy usually doesn't last."<o:p></o:p>
When a bubble is formed, more resources are diverted and wasted. Xie says businessmen in China are reluctant to focus on real economic activities and are devoting time and energy to market speculation. This means China will have fewer globally competitive companies in the future. “Even though China has had three decades of high growth, few companies are globally competitive,” Xie says. “The serial bubble making in the Chinese economy may be the reason.”<o:p></o:p>
The most serious damage that a property bubble inflicts is in changing demographics, says Xie. High property prices force many young couples to have fewer children. Even after property prices decline after a bubble bursts, this low birth rate culture cannot be changed. Many parts of Asia, such as Hong Kong, Japan, and South Korea, all went through property bubbles during their development. Xie concludes:<o:p></o:p>
Their birth rates dropped during the bubbles and didn't recover afterwards despite government providing incentives. China's one-child policy alone will lead to a demographic catastrophe in two decades. The property bubble makes the trend irreversible: when the government abandons the one-child policy, there wouldn't be meaningful impact on birth rate. Within two decades Chinese population could be very old and declining. Of course, property prices would be very low and declining also.<o:p></o:p>
Experts worry that China will become old before it becomes rich. Back in 2004, Richard Jackson and Neil Howe wrote a report about demographic trends entitled The Graying of the Middle Kingdom. They calculated that in 2004 the elderly — here defined as adults aged 60 and over — make up just 11 percent of the population. By 2040, however, the United Nations projects that the share will rise to 28 percent, a larger elder share than it projects for the United States.
In absolute numbers, the magnitude of China's coming age wave is staggering. By 2040, assuming current demographic trends continue, there will be 397 million Chinese elderly people, which is more than the total current population of France, Germany, Italy, Japan, and the United Kingdom combined.
In recent weeks, many experts have expressed growing concern about a bubble forming in China's stock and property markets. While investors love it when prices rise, many observers fail to realize the hidden and harmful impact it has on worker productivity, competitiveness, and demographic trends.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o:p></o:p>
As part of Beijing's effort to stimulate the economy, Chinese banks made $1.08 trillion in loans in the first six months of 2009, triple the year-earlier level. While most of that was intended for new roads, bridges, and factories, an estimated 20 percent was put into stocks by business managers seeking quick profits.<o:p></o:p>
Andy Xie, an independent economist based in Shanghai, recently warned in a blog post that Chinese stocks and properties are 50-100% overvalued. "The odds are that both will adjust in the fourth quarter (of 2009)," predicts Xie. “However, both might flare up again sometime next year. Fluctuating within a long bubble could be the dominant trend for the foreseeable future."<o:p></o:p>
Frank Gong, chief economist for China at JPMorgan Chase was quoted in Businessweek as saying, "Equity markets are supposed to do that." Gong and others argue it's unlikely the government will choke off credit, because no one wants to be blamed for slowing China's recovery.<o:p></o:p>
Xie calls China's asset markets a giant Ponzi scheme and predicts they will collapse when the US dollar becomes stronger. He warns, "The most ignorant retail investors are being sucked in by the rising momentum. They again dream of getting rich overnight. As in the past, retail investors usually lose, especially like the ones jumping in now. The final frenzy usually doesn't last."<o:p></o:p>
When a bubble is formed, more resources are diverted and wasted. Xie says businessmen in China are reluctant to focus on real economic activities and are devoting time and energy to market speculation. This means China will have fewer globally competitive companies in the future. “Even though China has had three decades of high growth, few companies are globally competitive,” Xie says. “The serial bubble making in the Chinese economy may be the reason.”<o:p></o:p>
The most serious damage that a property bubble inflicts is in changing demographics, says Xie. High property prices force many young couples to have fewer children. Even after property prices decline after a bubble bursts, this low birth rate culture cannot be changed. Many parts of Asia, such as Hong Kong, Japan, and South Korea, all went through property bubbles during their development. Xie concludes:<o:p></o:p>
Their birth rates dropped during the bubbles and didn't recover afterwards despite government providing incentives. China's one-child policy alone will lead to a demographic catastrophe in two decades. The property bubble makes the trend irreversible: when the government abandons the one-child policy, there wouldn't be meaningful impact on birth rate. Within two decades Chinese population could be very old and declining. Of course, property prices would be very low and declining also.<o:p></o:p>
Experts worry that China will become old before it becomes rich. Back in 2004, Richard Jackson and Neil Howe wrote a report about demographic trends entitled The Graying of the Middle Kingdom. They calculated that in 2004 the elderly — here defined as adults aged 60 and over — make up just 11 percent of the population. By 2040, however, the United Nations projects that the share will rise to 28 percent, a larger elder share than it projects for the United States.
In absolute numbers, the magnitude of China's coming age wave is staggering. By 2040, assuming current demographic trends continue, there will be 397 million Chinese elderly people, which is more than the total current population of France, Germany, Italy, Japan, and the United Kingdom combined.
